HA2032 Corporate and Financial Accounting Assignment Help

HA2032 Corporate and Financial Accounting Assignment Help

Abstract

In this study, two major companies have to be selected which should be listed on the Australian Securities Exchange. The companies name is Dexsus and Goodman companies, where both companies are listed in ASX real estate property dealing services. This reading will explain and compare between the Balance sheet, Items listed in these financial statements in the sections of owners’ equity and liability. This study will reveal and analyse the procedure of the preceding three-yearly movements of profit and loss of both companies.

Introduction

This research & study will reveal and determine the essential points that explain the significance of regulating financial accounting and management in the company. This reporting will explain the condition of the manager if they would able to disclose the information related to a financial decision or not. The assignment will also highlight the nature of the study and rules and regulation of the Australian Accounting Standards Board (AASB) in terms of setting accounting standards worldwide. It will describe the reason why the IASB is not regarded as mandatory for IASB members. Focusing on sole purposes of this part, in this research and the two companies from similar industries has been chosen and they are included in the Australian Security Exchange. Companies names are Dexsus and Goodman and both are from the Real Estate industry. The annual reports of these companies could be analysed from last three years in which proper analysis will be made related to items of equity, debt and revenue relation and so on. Companies balance sheet, the consolidated financial statement of profit and loss and annual report will be discussed based on last three years data including the list of equity, debts and revenue of the organisation.

Part A

(i) What items have been recorded under the owners’ equity section? Clearly explain.

Focusing on sole purposes of this part, in this research and the two companies from similar industries has been chosen and they are included in the Australian Security Exchange. Companies names are Dexsus and Goodman and both are from the Real Estate industry. The annual reports of these companies could be analysed from last three years in which proper analysis will be made related to items of equity, debt and revenue relation and so on. 

The items mentioned in the list of equities are paid-up capital, reserve surpluses, retaining earning and accumulated loss for the company.

  1. Capital Issues and paid-up capital:The share that has been allotted and issued to the stakeholders of the company. These shares are allotted are entitled from the part of authorised capital. Issued capital in the form of total authorised capital, so in the case of Dexus the total issued capital would be $4516 m. and in the case of Goodman, the total authorised capital is $56715 m, from which the issues capital is $4315 m.
  2. Reserves: reserves are an option in the assets where the company can attain high liquid and easily convertible into fund and cash to meet future and basic deadlines. These finds can be used for an emergency and establish a similar entitlement of the projects.  

 

  • Retained earnings and accumulated losses: 

 

Retained earnings and accumulated income can be considered as an aggregated net income of the companies which is accumulated by the companies, it is incepted accordingly establishment of the current dates of the financial reporting (Tykvová & Borell, 2012).

Accumulated losses define the deficit and losses of the companies where the retained earnings of the companies become negative. These accumulated losses cumulatively incurred by the accounting standards since the part of inception.

(ii) Explain the movement in each item recorded under the owner equity section with the reason.

Issued capital: the issues capital of the company name Dexsus has been increased over last financial Years which was $4536 in FY2015 and increased by $1390 in FY2018. These could be happened due to the issuance of more shares of common stocks that raised the capital budgeting in regards to funding business operational tasks. On the other side, the capital budgeting and issues capital have been reduced by $2935 in the comparison of the last three years. 

Reserves: the reserves of all two companies discussed above have been increased and fluctuating from last 3 years FY 2015 TO 2018. The reserves have been increasing in both companies’ cases because firms are not able to set more financial actions and meeting the uncertainties in the companies (Bobryshev, et. al., 2014).

Accumulated losses and retained earnings: for the financial years 2015, including FY16 & FY17-18, Both firms have been accumulated losses that have been increased rapidly. Both companies have bearing great attentive losses due to negative operational profits and purposes.

(iii) What items have been recorded under the liabilities section? Clearly explain.

Liabilities are the commitment and obligations of the companies. Liabilities are taken as those amounts where companies need to meet their short terms and long-term obligations to owe the creditors. In the format of the account, these words as Payable can be used generally for meeting liabilities.

The creditor is also an asset of the companies where they usually receive an advance for future assistance and help referred to liabilities. Following are the illustrations of liabilities described as the balance sheet of Dexsus and Goodman Ltd.: 

  • Accounting payable
  • Salary payable
  • Interest payable
  • Wages payable
  • Deposit to the customers
  • Warranties
  • Lawsuits to the customers
  • Unearned bond
  • Unearned revenue
  • Other accrued payables
  • Income tax payables
  • Bond payables

Normally accounts related to liabilities shows credit and debit both balances, where liabilities account debit balance keep negative and opposite credit balance in a liability account.

Following transactions can be taken as Dexsus and Goodman limited includes:

Discounted notes payable

Discounted bond bob

Cost bond issues

Cost debt issues.

Current Customers’ problems, 

(iv) Explain the movement in each item recorded under liabilities section with reason.

There are two types of liabilities one is current and other is non-current liabilities. 

  • Short terms Liabilities
  • Long term liabilities

Current liabilities and long-term liabilities:

Both companies name Dexsus and Goodman have been creating a debt of $3023 and $4098 in last three years. there are no genuine changes in the debt of both of the companies. Principle amount should be shared as several long-term liabilities. Interest on loans cannot be decided and considered as pure liabilities before relating it to the future. Unpaid interest can be figured out as a liability until the balance sheet data has been uncovered (Bobryshev, et. al., 2014). 

(iv) Explain the movement in each item recorded under liabilities section with reason.

There are two types of liabilities one is current and other is non-current liabilities. 

Current liabilities: 

After exercising the Balance Sheets of both of the companies name Dexsus and Goodman, it is observed that both companies have short terms or current liabilities before long terms liabilities to maintain their daily and regular obligations and working expenses. In Dexus, the current liabilities is $8561 Million and in Goodman Limited it is $7416 million in 2016, it has increased in long few years and by $917& $870 million in respect both of the companies Dexsus & Goodman in 2018. Both companies name Dexsus and Goodman have been creating a debt of $3023 and $4098 in last three years. there are no genuine changes in the debt of both of the companies. Principle amount should be shared as several long-term liabilities. Interest on loans cannot be decided and considered as pure liabilities before relating it to the future.

Following current liabilities are:

Wages payable: earned income should be the total income of the employees which he should earn but not received will be counted as wages payable. In most of the companies, employees are being paid in every two weeks, which changes the obligations. In Goodman Ltd. The payment of wages is usually made twice in the month that creates a difference in wages payable calculations in both of the companies.

Interest payable:

Dexus and Goodman company have the same method of purchases of goods and services over the last three years, companies are even given the facilities to the employees and workers to use their credits of such type of purchases (Macht and Weatherston, 2014).

Dividend payable:

Both companies issue stock to their employees and investors and pay them the amount in the consideration of dividend after the declaration, they both owed to shareholders.

Non-Current liabilities:

Liabilities which cannot be used as non-current liabilities, which have their long term duration more than 5 years such as bongs payable have long terms durations, long terms debts, policies can be counted as largest liabilities. 

Options of Long-term liabilities:

Warranty Liabilities:

Some liabilities which cannot be accurate or estimated correctly. Estimate amount of the long term warranty can be spent over to repair the product and in given services can be taken as a warranty period.  

Lawsuit Payable: 

The liability which cannot be anticipated and required more investigations, in the lawsuit payable it considered as probable and with anticipation mark. Anticipation includes the cost of court, attorney and settled fees of the court (Barnes & Smyth, 2013).

(v) Briefly explain the relative advantages or disadvantages of each source of fund.

The company’s sources of fund and its advantages and disadvantages are as follows:

  1. Bank Loan:

Merits of bank loan:

  • It is easy to receive a large amount and doesn’t take a long period to get it.
  • Provide secure and stability transactions of money, in today’s day’s banks are providing various tools for the safety of money and the security from false activities/
  • Obtaining tax benefits: taxes cannot be paid on the earned amount only to pay interest and loans.
  • It gives the facilities of non-withdrawn amount on earning.

Disadvantages of bank loans:

  • Rates are very high.
  • Limitation in withdrawing funds,
  • High terms and regulation in case of legal works.
  • Applications of loan, granting, sanctioning the loan- the long procedure is there that we have to follow.
  1. Advantages of equity raising:
  • No extra charges: there are no internal charges on equity raising from the public requirement.
  • No payback facilities.
  • Long term and strong financial growth.
  • Not long-term procedures we need to follow
  • Advantages of enhanced procedures and responsibilities.
  • Figure out of increased equities means increment in the share of profit.

Disadvantages:

  • Less tax benefit
  • Compulsory to pay a dividend.
  • Threat and security issues 
  1. Financing Through debt:

Advantages:

  • Low tax rates.
  • High tax benefit (Macht& Weatherston, 2014).
  • Limitation in procedures.

Disadvantages:

  • High-risk level
  • Debt equity ratio management is high
  • Short term source
  • Long term formalities have to maintain.

Part B

Conduct Research and critically examine the concepts of a small proprietary company, large proprietary company and reporting entity.

When the research and survey were started to figure out the entity of reporting team in the context of regulation of financial accounting in small scale and long term businesses, it is necessary to disclose the financial values and outcomes in interchanging factors, regulations and norms while managing financial reporting. (Collis, 2012). There are some major conflicts in the market related to capital and funding process of financial instruments that are largely being occupied by capitalists, financers and funding organisations. Favourable incentives and interest have become necessary in the financial reporting to amplify and implicate the wealth of the shareholders (Ferreira, et. al., 2012).

Disclosure on material becomes necessary and entering all non-disclosure information are become necessary for firms and small institutions in case of excessing the price level and compare it with the competitors. It became essential for the firm to disclose information correctly so that financial information can be collected effectively. It may increase the interest level of employees and potential investors to assume that there can be right and wrong before taking any investment decision. Non-disclosure of the right information might reduce the interest of potential investors. Sometimes the share prices of the firm bid down and would continuously lose their values in the comparison of competing firms.

In addition to this research, it can be concluded that this proposition can support by the fact of regulating bodies in small and big industries should be both specific in terms of financial decision, market norms and business perspective. It has been found the most of the firm might not willing to disclose the information which could be in favour of their primary competitors. Non-disclosing the details create liabilities and lack of transparency for companies in terms of competitors. Such decisions of non-making disclosure become bad and nonrelevant in the case of measuring benefits which would be economic wide (Acaciacoal,2019).

It became essential for the firm to disclose information correctly so that financial information can be collected effectively. It may increase the interest level of employees and potential investors to assume that there can be right and wrong before taking any investment decision. Non-disclosure of the right information might reduce the interest of potential investors. Sometimes the share prices of the firm bid down and would continuously lose their values in the comparison of competing firms. According to the research, there are many ways to settle down the things with the help of AASB, AASB participates to settle down the accounting standards worldwide. It the major aim of AASN is to figure out the issues of financial reporting across the globe and measure the necessity of developing and managing the financial reporting standards. It helps in creating assurance of documents, maintaining policies, incorporation of documented papers and creating exposure drafts of IASB to encourage the financial reporting procedures in Australia. Furthermore, AASB helps to make effective participation in IASB projects and maintain the documenting procedure with promoting the standards and improve them appropriately (Ferreira, et. al., 2012).

Conclusion

This reading was explained and compared between Balance sheet, Items listed in these financial statements in the sections of owners’ equity and liability. This study revealed and analysed the procedure of the preceding three-yearly movements of profit and loss of both companies. According to the research, there are many ways to settle down the things with the help of AASB, AASB participates to settle down the accounting standards worldwide. It the major aim of AASN is to figure out the issues of financial reporting across the globe and measure the necessity of developing and managing the financial reporting standards. The assignment has also highlighted the nature of the study and rules and regulation of the Australian Accounting Standards Board (AASB) in terms of setting accounting standards worldwide. It was described as the reason, why the IASB is not regarded as mandatory for IASB members. 

References
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